Elon Musk’s ride-sharing vision could save the U.S. auto industry

Elon Musk’s ride-sharing vision could be the answer to how ride-sharing could dramatically affect the U.S. automotive industry, according to a Moody’s Analytics researcher.

Tony Hughes, managing director for Moody’s Analytics, told TheStreet that ride-sharing services like Uber and Lyft could lead to a decline in auto sales in America, citing Tesla’s plan for future ride-sharing as a potential saving grace.

“The nature of the vehicles by my reasoning will be that they become more homogeneous where ride-sharing is everywhere,” Hughes said. “You imagine the taxi fleet; taxis are very homogeneous. If ride-sharing becomes 100% of all journeys — no privately owned vehicles — that trend would be very bad for car makers. It means that their product would become commoditized. As a general rule, businesses want to maintain that their product is special. If something becomes a commodity, it means they lose the ability to charge excessive prices … That’s less profit.”

Tesla’s plan for ride-sharing could change the U.S. automotive industry (Source: Tesla)

Essentially, Musk’s idea for people to enter their cars into a ride-sharing pool when they’re not using them would keep individual vehicles from automotive developers in driveways, thus eliminating the potential for high volumes of people to only use third party ride-sharing services and not buy their own cars.

By enticing people to purchase their own vehicles and make money through a ride-sharing pool, car companies would still have the opportunity to maintain that their products are individual and “special,” a major challenge caused by the commoditization of transportation, according to Hughes.

The plan, which would include a mobile app for users to easily list their vehicle as available for ride-sharing, would also feature a separate Tesla fleet of self-driving vehicles for use. This model — the vehicle fleet coupled with ride-sharing potential for individual owners — could allow major car manufacturers to continue to exist.

For Tesla and Musk, as long as these competitors buy into the sustainability of electric transportation, the competition should be welcomed.

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When I tried to carpool - I found 3 folks that work at the same place as I, but obviously lived at different locations. Picking them up, and finding them perpetually not ready, and finding them wanting to go home before I finished my daily tasks - made commuting more of an issue than doing a good job at work. Carpooling lasted less than a month, and poisoned the well for me to consider it again.That said...we can envision some future where things are different. Do we even NEED to commute to an office? Can a meeting be attended via a competent Skype? [I ran a laboratory, where attendance in front of the machines was necessary - so Skype would not work here. But for those that were not in lab coats, but spent their day behind a desk...commuting was inertia.]I like the image of a pod arriving, hauling, and disappearing...like a ski lift. I don't have kids, so the whole soccer mom discussion is foreign to me and I cannot offer any coherent solution.An app that calls a special sized taxi...sounds very doable. Will it solve the transportation needs of the next decade? perhaps some of them. Can we even embrace the possibility of "beam me up scotty". and not need to haul ones entire body from place to place?.Ahh, the future has many vectors. Some exciting. Some terrifying.

When I tried to carpool - I found 3 folks that work at the same place as I, but obviously lived at different locations. Picking them up, and finding them perpetually not ready, and finding them wanting to go home before I finished my daily tasks - made commuting more of an issue than doing a good job at work. Carpooling lasted less than a month, and poisoned the well for me to consider it again....

I agree. Remote working will solve us many problems.Meanwhile (or for those jobs that do require presence at the workplace), I think that a dynamic ridesharing could be the solution (instead of a steady carpooling).

Let's think with an open mind.

Why are you limited to commute with other people who work at the same company? Usually you think on carpooling with them because you know them from work. But, in fact, you could also share a ride with anybody else going in the same direction at the same time.

Do you really need they are your work mates? Or they are your friends since years ago? Or they are your followers in twitter?

Not really.

At any moment, all you really need is an empty seat in a car passing by your side at the time you want to go, and later passing near enough to where you want to go (most people would accept going the last half mile by foot, as this will increase a lot their chances of finding a compatible car in minutes).

Your chances will also increase a lot if (instead of requesting the car to pick you up just at your doorstep) you go to request your empty seat to this street next to your house where most car are riding.

The car that carries you back home, needs to be the same car that brought you to work this morning? Does it need to be the same car everyday? Not either.

As we all have timetables, most of the times you will meet the same car at the same hour. But if one day you are late, you will just take the next car with empty seats available.

In fact, all you need is to request the ride in an smartphone app (like DedoCar), and the app will let you know what's the next compatible car coming (whether you already shared a ride in it previously or not) and also if some of your friends is coming in the next minutes, in case you prefer to wait for any of them)

If you need to go to work every day, a taxi will always be more expensive than your own car (because you pay a driver who works for money, and probably a company that seeks profit). Besides, there will never be enough number of taxis (of any kind) nor shared cars (I prefer to call them cars rented by the hour) to carry all of us to the workplace at peak time. And, if their number was increased, most of them would be useless for the rest of the day.

I don't think you read my post before replying;).

[LIST=1]

You won't be paying for a driver, because the car will driverless. No driver = no salary.

Owning a car is far more expensive than a self driving taxi will be. Why? Because your car sits in a parking lot 96% of the time, assuming you're an average American. (Look it up, it's true.) You're paying for the car's fixed costs regardless of whether it is driving (car payment, depreciation). A self driving taxi can not realistically see 100% passenger utilization, but it will see 50%.

That means that a self driving car will be in use 12.5 times as often as a car you own. Given that much of the pollution generated by an electric car comes during its initial manufacture, decreasing the number of vehicles on the road by increasing the utilization factor of each vehicle dramatically cuts pollution.

Because of these factors (no driver, no taxi license, increased utilization cutting fixed amortization costs per trip), experts estimate that self driving taxis 10 years from now will cost as much as a bus ticket today.

If you decide to take a self driving rideshare, it will be much cheaper than a bus ticket today.

Do you guys really believe these analysts? Apparently, Wall Street analysts don't have kids (plus all the stuff that goes along with them) and don't have a need for their own cars. They can simply take the subway, Uber, or walk to work.

Most of the rest of us will continue to need their own vehicle. Most people drive their children to swim meets and soccer practices and do require a dedicated automobile. It's not practical to summon a ride, wait 10-20 minutes while my sons are punching each other, and then stuff all of us (baby seats, booster seats, snacks, sports equipment, etc.) into a dirty, smelly publicly-used car. It just ain't gonna happen.

I totally see where you are coming from and you make a really valid point. However, I would not say "It just ain't gonna happen" I would say it will but in small quantities. The market potential I see is college students, busy city areas, and maybe even high schoolers. In America it is pretty standard that high schoolers have a car because of all of the activities they attend. Now there is no need for this way of life anymore. I wouldn't say it is going to eradicate the need for owning a car but, it might for some.

I totally see where you are coming from and you make a really valid point. However, I would not say "It just ain't gonna happen" I would say it will but in small quantities. The market potential I see is college students, busy city areas, and maybe even high schoolers. In America it is pretty standard that high schoolers have a car because of all of the activities they attend. Now there is no need for this way of life anymore. I wouldn't say it is going to eradicate the need for owning a car but, it might for some.

True... You make some good points as well. The part I disagreed with in the article was the speculation that 100% of transportation will be ride sharing. Probably more like 10-20% in the next ten years. It will take a long while for people to become comfortable with driverless cars as well.

This discussion skips over the Preference of being alone. I HATE riding in a bus. The fellow passengers eat smelly food, hog seats, talk too loud, play music ....and are just in general not folks I want to share my time with. It is as welcoming as an airplane seat. Something I avoid whenever possible.I have taken three taxi rides in 50 years. I did not trust the driver. I found the car cramped, worn out, not at all a pleasant way to spend my time on a trip to the airport. I don't like the parking fee, but will pay it over having to be reliant on the lowest common denometer of public transport .Would I let the general public get into my $100,000 tesla. There are a few, very few, gentlemen that I would let sit in the passenger seat. There are NONE that I would let drive my car.

I think there are folks that live in a big city and view taxi life as normal. They shlep everything they need for the day into and out of some bag and --if they forget to bring a change of clothes -- they just go without.I always have a change in my trunk. I need it perhaps once per week, but never know when. A ride share? not in my current lifestyle. A ride share ever in my future? Hard to imagine. Just as my moving to NYC is hard to imagine. Not a place I ever want to go, much less live there. Those that have got used to sharing elbow room with mass hords- good for you- but stay away from me.

I think the analysis on self driving cars had been done and it may leed to more vehicle movements not less. So the roads will be clogged. Hence the need for The Boring Company and tube transportation, Hyperloop.The biggest losers will be railways and current bus companies.Differentiated individual transport vehicles"brands" will still remain through it all. Because that appeals to the individual and most people won't want to share their cars.

Do you guys really believe these analysts? Apparently, Wall Street analysts don't have kids (plus all the stuff that goes along with them) and don't have a need for their own cars. They can simply take the subway, Uber, or walk to work.

Some people will always need their own vehicle, but you're overestimating the number of people that won't be able to use self driving taxis or rideshares. The reason for this is because you're assuming vehicles (and taxis/rideshares) won't evolve from their current form. Here are a few things people rarely think about:

[LIST=1]

When all (or nearly all) vehicles are self driving, it won't necessarily make sense to call for a 5 person vehicle to take you to work. Why pay more for a 5 person self driving taxi when you can click the "one person pod" option on the app instead?

For regularly scheduled trips like going to work or school, you'll just have your app set to call a vehicle for a specific time. You won't manually summon a vehicle and wait for it.

When a majority of the vehicles on the self driving taxis, you won't be waiting for 20 minutes after hitting the "summon X type of vehicle" button on your phone. It will be more along the lines of hailing a random cab on the street in New York City, rather than calling a taxi company to send a cab specifically for you. They'll be everywhere, waiting to pick you up at a moment's notice. You'll be waiting for seconds or at worst minutes, not for half an hour. At least, in a city or suburb.

Rural life will be different, as it always has been. I'd be surprised if rural areas don't have a high percentage of vehicle ownership for the foreseeable future. You'll still be able to call a self driving vehicle, but if it has to drive 500 kilometers from the nearest depot or city to pick you up, expect to pay an arm and a leg.

Most things people store in their vehicle are garbage. You (a generic you, not you specifically;)) don't actually *need* the vast majority of the crap in your car, you just keep it there because you're too lazy or forgetful to clean it up. Similarly, you don't need to leave your kid's sportsball equipment in the car. The bag of crap can be brought in your house every time you go to sportsball. People with several kids of sportsball age already have to do this, because you can't leave 4 sets of football equipment and 4 sets of hockey equipment in your vehicle and still expect to have room for groceries. The kids can haul their own crap into the house instead of leaving it in the car. They'll get use to the new way of doing things quickly.

As I implied in #1 above, there will be all sorts of different vehicles you can call. You'll set your preferences in the taxi app of your choice, and unless you override them, those will be the only types of vehicles your app will call. If you need a vehicle with 2 preinstalled carseats for your twin babies, then that will be the type of vehicle that shows up every time. If you need a one person pod, that will be all that ever arrives. You'll pay more for larger vehicles with more options (car seats, extra storage space, extra leg room), and less for smaller, less optioned vehicles (just room for you and your school backpack). Because of this, rideshares will slowly be displaced by more specialized vehicles. This process will take decades though, so don't expect this in 10 years.

The more specialized the vehicle you require, the longer it will take to arrive. If you need a standard 5 seat sedan, you'll get one in seconds or minutes, depending on your location and the time of day. If you need a minivan with 6 preinstalled carseats, you'll need to either own a vehicle yourself, or make sure you always plan out a pre-call so that you're not waiting for an hour for one of the 3 vehicles in your city with that odd configuration to pick you up. (LATE EDIT TO ADD: Further into the future, modular vehicles could possibly eliminate this problem, but that's not happening any time soon.)

All of this will be driven less by the increasing convenience of self driving taxis, but rather by the high and increasing cost of vehicle ownership. People who take buses right now will convert to rideshares, and eventually to single person pods. People (like me) who currently own a vehicle but would *really* rather spend 3/4 of that money on something else will sell their vehicle (or trash it) and use a rideshare or pod instead, because it's cheaper. The much lower cost of self driving taxis vs owning a vehicle will mean that many people will get ride of their second and third vehicles, and get by with owning one instead. And many people with low incomes who currently *have* to own because of where they live (Los Angles for instance) will get rid of their only vehicle and exclusively use taxis. Economics, not convenience, will be the driver of self driving taxi adoption.

Anyway, what I outlined above is literally the only way things will go, longterm. There are no other viable options. We don't know what proportion of the self driving taxis will be provided by individuals (via something like a Tesla Network that you sign up for) vs large corporations, or how those numbers will change over time, or how quickly adoption will happen, but one way or another, this will be the end result.

You make some very good points.This week I spent in the Laguna Beach area (south of Los Angles, and influenced by their traffic). I rode on their blue shuttle bus - a nice circulator that constantly roams the streets. Hop on and hop off when you want. Nice idea. I spent a lot of time waiting for the "next bus", and it took me to a depot where I had to wait for the "next bus" to go down another path that takes me close to where I want to be. Elapsed time for a 10 min walk approached 50 minutes. And the wooden seats were sooo soft!!. [I have a current malady that makes walking 15 yards painful and HAD to use public transport]. Next, we ordered up a Lyft. The driver arrived in a clean car, with less than a 5 min delay. Took us directly to our restaurant. Cost $5.00 plus $2 tip. Not bad for a party of 4. I can see the attractiveness to this ride-share. I left my tesla plugged in, did not have to find a parking place, arrived at the front door of the restaurant and not in need of a walk from the garage. If I lived in the LA area, I might shift my travel-philosophy toward ride share. It is a more-perfect theme than a circulating bus. Still, waiting on a corner for a car to show up, is less (luxury?) than wandering into my covered parking place. I'm spoiled, like my life style as it is. But I also realize not everyone has it and they need a style that fits their environment. Ride share has its place.

You make some very good points.This week I spent in the Laguna Beach area (south of Los Angles, and influenced by their traffic). ....

I think you are right, and there isn't a single solution valid for everyone.The point is that technology (like simple and free smartphone apps, no need to develop complicated driverless cars) can offer us right now innovative ways to use old transport means, that are currently underutilized (like the empty seats in our cars).

So there will be more transport means for us to choose, according to our personal circumstances at any moment.At www.DedoCar.com we think on offering two new ways: ridesharing in private cars going in your direction, both as a driver or as a passenger, as far as empty seats are widely available for commuters at peak hour.

If you need to go to work every day, a taxi will always be more expensive than your own car (because you pay a driver who works for money, and probably a company that seeks profit). Besides, there will never be enough number of taxis (of any kind) nor shared cars (I prefer to call them cars rented by the hour) to carry all of us to the workplace at peak time. And, if their number was increased, most of them would be useless for the rest of the day.

The solution to our problems is not carsharing, but ridesharing (also called carpooling).

There is nothing wrong with having your own car (even in the USA, where there is double number of cars than driving licenses).

The problem is most people feel that they have no other choice but to use its own car every day to go to work.

They don’t realize that, as everyone is driving to the workplace his own five seat car (wasting 4 empty seats), at peak time there are millions of people going the same way, in millions of cars going the same way, with four times more empty seats wasted, but all of them suffering excessive travel cost, traffic jams, parking problems, fuel shortage, air pollution, and climate change.

First of all, people should realize that this behaviour of travelling just one person per car is what causes the problems.

When they are trapped in the traffic jam they should notice that they are surrounded by cars carrying just one person, and such a big number of cars is no longer required, because the same people can be carried in a fewer number of cars, when using efficiently their empty seats to carry as passengers other people going to work in the same direction.

All they need to solve their problems is a carpooling smartphone app that tells a driver on the go what passengers he can carry, because they are going in his same way to work; and tells a passenger what’s the next car passing by that can carry him. That is just our project in www.dedocar.com

When people share their car trips, harnessing those millions of empty seats, there will be immediate benefits:

1. Cost savings.The current trip cost can be divided between 2, 3, 4 or up to 5 people (the car driver and up to 4 passengers).

2. Increased comfort.Just 1 out of several travellers needs to drive, find a parking place and care about car maintenance. The rest of them go relaxed as passengers in somebody else’s car empty seat.

3. No more traffic jams.With fewer number of cars on the road, traffic congestions will disappear and we will get rid of their pernicious effects:

· from 3 to 4 times longer times wasted on travelling;

· and 80% more pollution emitted by cars trapped in jams.

4. No more parking problems.Just one out of several travellers needs a parking place.

5. Fuel saving.A car needs the same amount of fuel to carry 5 people than just the driver. Less fuel demand will decrease energy price.

6. Less air pollution and climate change.A car carrying 3 additional passengers keeps 3 cars stopped, so it pollutes just ¼ than before (when all four travellers drove their own cars)

This way, people can enjoy the luxury of keep owning a car (if they like to), but most of them don’t need to use it ever day (most people will prefer to use the app go as passengers); and if they prefer to drive, they can use the app to save lots of money to buy their next car which, of course should be a Tesla.

You won't be paying for a driver, because the car will driverless. No driver = no salary.

Owning a car is far more expensive than a self driving taxi will be. Why? Because your car sits in a parking lot 96% of the time, assuming you're an average American. (Look it up, it's true.) You're paying for the car's fixed costs regardless of whether it is driving (car payment, depreciation). A self driving taxi can not realistically see 100% passenger utilization, but it will see 50%.

That means that a self driving car will be in use 12.5 times as often as a car you own. Given that much of the pollution generated by an electric car comes during its initial manufacture, decreasing the number of vehicles on the road by increasing the utilization factor of each vehicle dramatically cuts pollution.

Because of these factors (no driver, no taxi license, increased utilization cutting fixed amortization costs per trip), experts estimate that self driving taxis 10 years from now will cost as much as a bus ticket today.

If you decide to take a self driving rideshare, it will be much cheaper than a bus ticket today.

Yes gopher65. I read your post carefully.Can you understand that I may have a different point of view?

Who drives the car has nothing to do with how efficient it is its usage.While my car is parked at my garage, it doesn't waste energy, nor pollute, nor collapse the streets, nor consume its potential (let's say 300.000 miles, before I need a new one). The only wasted expenses then are the annual insurance and the circulating tax. That's all.But the really important issue is another one:

Any 5 seat car (despite it's a private/taxi - driverless/with a steering wheel) that rides carrying a single person/customer, is wasting 4/5 of its potential and 4/5 of the energy, it's causing traffic jams, parking problems and it's polluting much more than you might think (did you know that, at a traffic jam, a car pollutes an 80% more).My point is:

We can solve this big issue without any “carphobia”, without the need of banning private cars, and without replacing our current cars by new ones.All we need is the aid of a carpooling smartphone app (see www.dedocar.com), that tells reciprocally drivers and passengers who else is going in their direction, so they can share the ride, to be several times more efficient and cost effective.

I believe that what we really need to solve our problems (mainly when commuting to work at peak hour), is not a huge fleet of self driving taxis, but higher occupation vehicles.

This discussion skips over the Preference of being alone. I HATE riding in a bus ...

Well... Of course, you indeed have the right to ride alone, and you are also right (we know that ride-sharing is not for every one).If you usually drive in the desert, people is so scarce there that chances are that you probably are sentenced to ride alone forever.DedoCar ride sharing app is designed mainly for urban commuters who struggle every day in congested traffic, and are willing to save a lot of their travel cost (due to passengers refunding a huge part of it), and also save lots of their time lost in traffic jams.

But even they have the right not to share their rides. They will simply not save any travel cost, but they will still benefit from the reduction in traffic jams achieved by several other people who leave their cars parked at their garage and share a single car, instead of each one driving its own. And they will also benefit from breathing a less polluted air in the city (and may be enjoy also cheaper fuel due to a demand reduction, … ).But the best thing is that even a desert driver as you (without sharing a single ride in its entire life), will benefit from a lesser risk of a climate change.

A private ride-shared car is not the same as a public bus.I don't think any passenger sharing a short ride to the workplace with the owner of the car will eat smelly food, nor do such things as you tell.And in case he does once, the driver will have the chance to mark him as inappropriate, and fellow travel mate low rates will make nobody else will pick him up again.That’s the advantage of each one having to maintain a reputation score in the platform.

I can’t imagine a better advertising for Tesla, that Elon Musk sharing a ride in its $100,000 Tesla.

Do you guys really believe these analysts? Apparently, Wall Street analysts don't have kids (plus all the stuff that goes along with them) and don't have a need for their own cars. They can simply take the subway, Uber, or walk to work.

Most of the rest of us will continue to need their own vehicle. Most people drive their children to swim meets and soccer practices and do require a dedicated automobile. It's not practical to summon a ride, wait 10-20 minutes while my sons are punching each other, and then stuff all of us (baby seats, booster seats, snacks, sports equipment, etc.) into a dirty, smelly publicly-used car. It just ain't gonna happen.